Tuesday, February 14, 2006

Change The Channel

It looks like the Americans want to restart the talks on the softwood lumber issue. On the surface, any signal from Washington that they want to end the dispute is a positive development. However, the circumstances on both sides of the border present a worrying urgency. The American administration can't claim compromise as a core ideal, more prone to bullying and unilateralism. Why the desire to cobble together a deal:

A source close to Canadian industry said the U.S. government was pushing to reopen negotiations because Canada was winning the legal battle with trade authorities...A source close to Canadian industry said the U.S. push to resume talks was partly based on a court case brought by Canada against the Byrd amendment which will be heard in late March.

"Canada has filed a case in the U.S. court of international trade that the Byrd amendment cannot be applied to goods coming from Mexico or Canada because the U.S. did not notify them, according to NAFTA rules," the source said.

"Their claim to the money is about to be defeated in court and we are very close to the end in all of the other NAFTA and WTO cases, many of which are not going their way," the source said.

Translation, the Americans have calculated they will lose the upcoming legal fights, in turn eliminating any remaining leverage. This latest overture represents a preemptive strike to get the best deal possible before their position is weakened. So, we have the Americans right where we want them, right?

Enter the embattled David Emerson, and by extension the Conservative government. Under the present circumstances, the politically expedient move for Emerson would be a high profile negotiation on lumber to effectively distract from his current problems- change the channel. It is this reality that worries me. Will Canada settle for a lesser deal in the short term to look relevant? Maybe, Canada should remain elusive until these court proceedings provide more firepower for our position. Will Emerson's desperation to get away from this scandal force a relatively bad deal? One thing we have learned, Emerson is a political animal, despite his resistance.

I don't like the timing of this American overture. If the bottomline is a deal for a deals sake, the timing may be brilliant. But, whatever framework is established will essentially be written in stone, much like a constitution, so it is imperative to get the best solution for Canada. I'm not an expert on the nuances of this conflict, but anytime this American administration is gregarious we should be suspicious. Emerson will surely be tempted to look the hero to silence his critics.